What If You Die Too Late?

If you're a white man born in 1960, according to the Centers for Disease Control, you can expect to live to the age of 67.4. Wait, though! Don't despair -- that's an average number. Many such men will live well past that age because, as you know, there are plenty of people who die seemingly way too early, at ages far younger than that.

Here -- let me prove my point that it's very possible to live well beyond our expected lifespan. Take Los Angeles resident Gertrude Baines as an example. She's now the oldest known person on earth at age 114. And right now, there are 90 people who have had their age verified as 110 or older.

What does this matter? Well, think it through. If you live a very long life, you'll enjoy plenty of upside: You'll likely get to meet your great-great-grandchildren. You'll get to see what new technological wonders are introduced in the coming decades. Maybe you'll get to see the United States elect its first gay, Jewish president. Of course, there will be downsides, too. You might end up in a nursing home at age 103, stuck watching the 66th season of According to Jim.

Here's an even worse outcome: You might run out of money! Imagine that you retire at age 65, expecting to live until maybe age 85, or, if you're lucky, 95. But if you live to 105, you'll have received 10 or more unexpected years -- will you have enough money to support yourself? From age 65 to 105 is 40 years! Your retired life may end up being as long as your working life.

Too much time, not enough money
Take some time and think about what your big plan is. Have you bought into an annuity that will pay you enough to live on for 30 years after you retire? Well, that might only take you to age 95. (Many annuities are not necessarily bad -- there are some that remain in effect until you die. Just steer clear of variable annuities.)

Maybe you've learned, as I did via our Rule Your Retirement newsletter, that to make our nest eggs last, we should plan to conservatively withdraw about 4% of it per year in retirement. Now, that sounds more responsible. But wait -- it won't work if your nest egg isn't big enough to serve you well. If you retire with $600,000 in the bank, 4% of that will give you an annual income of $24,000, or $2,000 per month. Will that suffice? Maybe, but maybe not.

That shouldn't get you overly depressed. It should instead inspire you to save and invest more, and more effectively, to build a bigger nest egg. All is not lost -- you can make a world of difference just by delaying your retirement for two or three years.

Many happy returns
In our Rule Your Retirement newsletter, Robert Brokamp pointed out a certain class of very promising stocks: those that pay sizable dividends. He said, "According to Ned Davis Research, from 1972 to 2006, S&P 500 dividend payers returned 10.1% annualized, whereas index non-payers returned just 4.1%." That's kind of mindboggling, isn't it? Let me show you why: If you started with $10,000 in 1972 and it grew at 4.1% annually, you'd end up with $39,200 in 34 years. If it grew at 10.1%, you'd end up with $263,500. See what I mean? You'd have more than six times as much.

Robert regularly recommends promising stocks and funds in Rule Your Retirement (which you can try for free, with no obligation and with full access to all past issues). But if you'd rather dig for appealing stocks on your own, you might keep some of his advice in mind: "As a group, cheaper stocks will continue to beat pricier stocks over the long term. But if you expand the definition of growth to include metrics beyond price alone, you'll open up your portfolio to many of tomorrow's greatest companies."

Based on that, you might look for companies with relatively low P/E ratios and with solid net profit margins and revenue growth rates. Here are some that popped up when I screened for those criteria -- be sure to research them further if any interest you:

Data: MSNMoney.com.

There are lots of stocks out there that can serve you very well.

Get your retirement ducks in a row
Once you've got a plan to amass enough to live off of for a long time, you'll likely sleep better. It isn't as hard as you think -- you just might need to estimate how much you'll want to accumulate and then start making the most of your 401(k) and an IRA, while giving some thought to estate issues. (We'd love to help you with all of that. I encourage you to check out our Rule Your Retirement newsletter service, which can make your retirement planning much easier.)

So, don't doubt that you could live a heck of a lot longer than you expected to. If you buy a lottery ticket now and then, it's because you believe that you could possibly beat those millions-to-one odds. Well, living to 100 or more involves much more modest odds. In fact, if you were born in 1980, your odds are merely 87 to 1.

You never know -- you might give Gertrude Baines a run for her money. Oh, but you won't need to because you'll have enough money of your own.

Longtime Fool contributor Selena Maranjian owns shares of Amgen. The Motley Fool is Fools writing for Fools.